Target Corp. has agreed to pay $2.8 million to thousands of rejected job candidates for upper-level positions because tests they were given disproportionately screened out applicants based on their race or gender.

The payout was announced Monday by the Minneapolis Area Office of the U.S. Equal Employment Opportunity Commission (EEOC) and will be disbursed among more than 3,000 people, said Julie Schmid, acting director for the agency in Minneapolis.

"The tests were not sufficiently job-related," Schmid said. "It's not something in particular about the contents of the tests. The tests on their face were neutral. Our statistical analysis showed an adverse impact. They disproportionately screened out people in particular groups," namely blacks, Asians and women.

Target spokeswoman Molly Snyder said the company has and continues "to firmly believe that no improper behavior occurred regarding these assessments. However, in light of the fact that none of the assessments cited by the EEOC are being used today and given the significant resources that would be required to litigate this case, Target agreed to a settlement with the EEOC."

The settlement is among the highest in recent years for discrimination in hiring processes. Most were under $1 million. Some cases that also involved harassment on the job were settled for more, as were a $3 million settlement against a Chicago janitorial firm in 2010 and a $3.1 million settlement with Pepsi Beverages Co. in 2012 alleging that background checks for more than 300 African-American males included arrests, not convictions.

In the complaint against Target, filed in 2006, the tests were given to applicants for "high-level, non-hourly" positions, Schmid said.

In addition, the EEOC said it found that one of the assessments that the Minneapolis-based Target formerly used and that was performed by psychologists had violated the federal Americans with Disabilities Act (ADA). Schmid said this assessment was a pre-employment medical exam that was reserved for particular leadership openings. The ADA forbids such exams before a job is offered.

The pre-employment tests, or assessments, in question had been used "over the past decade," and the EEOC concluded that "only a small fraction of the assessments … could have been problematic," Target's Snyder said.

The EEOC also determined that Target failed to maintain the records required to assess the impact of its hiring procedures.

Target stopped using the tests during the EEOC's investigation. The company also agreed to better track its testing process and check for impact based on race, ethnicity and gender. Target agreed it will share those findings with the EEOC.

"We applaud Target for taking corrective action to ensure the validity of their hiring practices," said EEOC Chairwoman Jenny R. Yang. "This resolution demonstrates the benefits of working with EEOC and serves as a model for businesses committed to effective and lawful selection procedures."

The amount of money received from the settlement per person will vary based on the consequences experienced by each individual, Schmid said.

Paul Walsh is a general assignment reporter at the Star Tribune. He wants your news tips, especially in and near Minnesota.

In 2011, Sean Pugh was arrested for allegedly violating terms of his release from prison. A year and a half into his roughly two-year stay in the Brown County Jail, he realized he owed the county around $17,000 — the result of a $20 daily "pay-to-stay" fee plus fees from previous jail stints.